Moscow has started to remove some troops from the Ukrainian border, according to media reports. Russia and the West alternate threats and outstretched hands, but with closed fists. Wall Street, which fell heavily on Monday, was mixed on Tuesday, with a slight rebound of the Nasdaq (+0.1%) but a decline for the Dow Jones (-0.5%) or the S&P500 (-0.4%). In fact, almost all sectors were in the red, with the exception of consumer cyclicals, because Amazon and Tesla held up well, and technology, which was helped by Google and Nvidia. This morning, S&P, Nasdaq and Dow futures were up by 1% or more.

The Ukrainian crisis has replaced inflation as the number one source of volatility across markets since Friday (but don't forget inflation). Investors are normally able to adjust to macroeconomic headwinds, but this is much more difficult to adjust to the consequences of a military invasion. Unless there is a quick compromise between the Kremlin and the West, indexes will play a roller coaster game according to new events or statements. In the meantime, these tensions are boosting energy assets, both oil and gas (which is not very good for inflation).

In 2021, Russia provided 38% of the natural gas needs of the 27 EU countries, ahead of Norway (22%), external LNG imports (18%) and Algeria (9%). Europe produces only 9% of the gas it consumes, but it is doing rather well this year... because the winter is not very harsh. These mild temperatures, combined with increased LNG imports and Russia's compliance with its contractual delivery obligations, are keeping European stocks at a decent level. But going forward, reducing its dependence on Russian gas will not be an easy task.

In the very short term, despite the signals of appeasement sent from Eastern Europe - where talks are resuming between top international leaders while Ukraine holds its breath.


Economic highlights of the day:

The Empire Manufacturing index for February and the Producer Price Index for January are the main indicators today.

The dollar is down to EUR 0.8804. The ounce of gold is again flirting with USD 1852. In the oil market, the price of a barrel of oil eased slightly to USD 94.18 for Brent and USD 93.04 for WTI. In the sovereign debt market, the US 10-year signature reaches 1.97%. Bitcoin is back up 2% to USD 44323.


On markets:

* Intel - The U.S. semiconductor maker announced Tuesday the $5.4 billion buyout of Israeli rival Tower Semiconductor to boost its production capacity amid strong demand.

* Blackstone - The U.S. private equity firm announced Tuesday a €23.7 billion recapitalization plan for Mileway, its European subsidiary specializing in "last mile" logistics.

* Marriott reported Tuesday a profit for the last three months of 2021 compared to a net loss for the same period a year ago on the back of higher hotel occupancy rates.

* Immunogen - The group is up 12% in pre-market trading after signing a licensing agreement with Eli Lilly for the use of its camptothecin molecule to provide a treatment for cancer patients.

* Texas authorities launched a lawsuit Monday against Facebook, a subsidiary of Meta Platforms, for collecting biometric data from millions of Texans without their consent via the group's facial recognition technology.

* Tesla CEO Elon Musk donated more than five million shares of the automaker's stock to charity in November for a value of $5.7 billion, a stock exchange notice showed Monday.

* Berkshire Hathaway - Warren Buffet's company acquired nearly one million shares of Activision Blizzard before the announcement of Microsoft's $68.7 billion takeover of the video game publisher, a stock exchange notice released Monday shows. As of Dec. 31, Berkshire Hathaway owned 14.7 million shares of Activision stock worth about $975 million.


Analyst recommendations:

  • Affirm Holdings: Loop Capital adjusts price target to $50 from $72, maintains hold rating
  • British American Tobacco: RBC moves from Outperform to Sector Perform with a target of GBp 3300.
  • Copa Holdings: HSBC upgrades to buy from hold. PT up 17% to $104.
  • Enbridge: Industrial Alliance downgrades to hold from buy, maintains price target at CA$56
  • GlaxoSmithKline: Liberum remains Buy with a price target raised to GBp 1900 from GBp 1870.
  • GoDaddy: Morgan Stanley raises price target for to $95 from $81, maintains equalweight rating
  • Greif: Wells Fargo Securities upgrades to overweight from equal-weight. PT up 24% to $71.
  • Illumina: Piper Sandler adjusts price target to $460 from $450, reiterates overweight rating.
  • Laboratory Corporation of America Holdings: Morgan Stanley adjusts price target to $360 from $380, maintains overweight rating.
  • PepsiCo: DZ Bank cut its recommendation on PepsiCo Inc. to hold from buy. PT up 8% to $180.
  • Moody's Corporation: Argus lowers price target to $400 from $450, maintains buy rating.
  • Novavax: Cantor Fitzgerald adjusts price target to $174 from $282, reiterates overweight rating.
  • The Allstate Corporation: UBS upgrades to buy from neutral, raises price target to $149 from $126.
  • TotalEnergies: MKM Partners adjusts price target to $81 from $76, maintains buy rating
  • Timken: Evercore ISI upgrades to outperform from inline. PT rises 18% to $78.
  • Under Armour: Stifel Nicolaus adjusts price target to $20 from $24, maintains hold rating
  • Unilever: RBC moves from Underperform to Sector Perform targeting GBp 3,600.